FORWARD MARCH

In their desire for control, “precautionists” are seeking optimal safety in everything from cleaning products to toiletries. Precautionists swap chemical products for vinegar and water and leave their shoes at the door so that they don't track contaminants into the house. They sleep on cotton sheets, eat organic food, and buy chemical-free toothpaste and deodorant. The key to marketing to precautionists is to encourage them to lobby for a better, safer environment but to also encourage them to enjoy life.

	ASIA IS CHIC

In the next 10 years, as many Americans will visit China as will travel to Europe. As was the case 20 years ago, when they brought back a taste for things French and Italian from their travels, these travelers are likely to embrace Asian themes. Merchants as diverse as Alsto's, Hammacher Schlemmer, and Coldwater Creek already sell bamboo home accessories — which also ties in with the eco-friendly trend, as bamboo is a replenishable resource. And Chinese calligraphy already adorns everything from wrapping paper at Flax Art & Design to rubber bracelets from Oriental Trading Co.

	ACTIVEWEAR CONTINUES AS EVERYDAY WEAR

Two-thirds of American women dedicate at least half of their closets to activewear, and they're not saving the workout clothes for the gym. They are trading traditional sportswear for activewear as their casual apparel of choice. Going forward, activewear manufacturers will place much more emphasis on having a fashion point of view, which explains the recent partnerships between Stella McCartney and Adidas and between Alexander McQueen and Puma. American Eagle's new retail concept, Martin + Osa, is dedicated to the concept of fusing high-tech sport and casual sportswear. And actress Scarlett Johansson will launch a line of urban activewear next year in partnership with Reebok.

	THE BRANDING OF PRIVATE LABEL

What appears to be an oxymoron is now true. Wal-Mart's Ol' Roy dog food is preferred over Purina. 7-Eleven now sells more of its private-label Santiago beer than it does Corona. About one of two fans sold in the U.S. is Home Depot's Hampton Bay brand. Private brands account for more than 40% of J.C. Penney's revenue, as well as for much of its turnaround in recent years. Retailers are beginning to recognize that they cannot simply rely on nationally branded products to attract consumers and retain their business.

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Patricia S. Pao is CEO of Pao Principle, a New York-based marketing consultancy specializing in the luxury goods, beauty, and retail industries.

	The luxury of change

	BY MILTON PEDRAZA

Perhaps the rich are different…but in many ways companies targeting the wealthiest consumers aren't so different from those marketing to a mass audience. The predictions we're making for luxury firms aren't really all that distinct from those for consumer merchants at large.

	HOLA, AMIGOS

Innovative luxury goods and services firms are finally beginning to realize that Hispanics, along with African-Americans and Asian-Americans, now make up profitable demographic segments of the wealthy-consumer population. Wealthy actors, athletes, and entertainers from minority groups are the most conspicuous consumers of luxury goods.

For instance, rap stars often sing the praises of Cristal champagne (although Jay-Z called for a boycott of the bubbly earlier this year, after comments a Cristal executive made in a magazine article offended him). In actuality most wealthy nonwhites are conservative entrepreneurs, executives, and professionals. As “new” money, they're eager to consume and experience top luxury brands — and they expect genuinely friendly customer service.

The savvy luxury marketers will not only embrace these consumers on their own terms but will also begin to tap their authentic (not stereotyped) cultural roots for new product and service lines that will generate loyalty, affinity, and profits. Ethnically inspired luxury goods and other initiatives geared toward minority segments are bound to have crossover appeal among mainstream wealthy and international consumers as well.

	DELUSIONAL “DIFFUSIONALS”

The true luxury fashion brands that want to retain their upscale status in the minds of wealthy consumers will retreat from — or avoid all together — leveraging their prestigious names to launch second-tier or diffusional lines. It's delusional to think that luxury firms can pursue a move down-market without losing their standing among their best customers.

	CAPITAL INVESTMENTS

Many luxury brands are starting to look tired and old-fashioned due to a lack of investment. Stay at some of the world's finest luxury hotels, test-drive the foremost luxury automobiles, buy a new pair of shoes from the best craftsmen, and you will find many old, tired brands that need major reinvestment in facilities, models, and materials. Today luxury brands must deliver the most up-to-date technology and modern design with the greatest of comfort and style. So look for the best hotels to upgrade their televisions to high-definition, flat-screen TVs. Look for service providers such as wealth managers to stay on top by providing the best security and convenience to their tech-savvy, wealthy customer base.

	LUXURY IN CYBERSPACE

The celebrated sites of Web 2.0 — MySpace, Yelp, Facebook, YouTube — are primarily for the young and restless (and careless) who have nothing to lose. In 2007, Internet entrepreneurs will realize that mature, affluent consumers want to benefit from peer-to-peer affinity communities too. Many of the community sites for wealthy consumers will be subscription based and membership based — essentially online, commercial-free “gated” communities. And in terms of reaching upscale consumers, the emphasis will continue to shift from traditional media such as broadcast television and print magazines to emerging venues such as video-on-demand and satellite radio in addition to online communities.

	CRM EXPERIENCE

Luxury firms should have been among the first to use sophisticated technological and analytical tools to surgically target and customize offers for their clients. So far, however, most luxury goods and services firms get an “F” in customer relationship management. A shocking number even fail to execute on easy lay-ups such as a well-targeted and measured referral program. It doesn't help that most firms lack strong marketing departments and even appropriately skilled quantitative and analytical staff to create such programs.

This will change, however. Having understood the power of optimizing customer experience in the creative and artistic sense, luxury marketers will begin to develop the personnel, analytics, and data management skills as well as the testing and learning methodologies required to operate a highly adaptive, customized marketing and selling operation. It will be a very difficult transformation to this level of business intelligence, but it will happen with quickening frequency in 2007.

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Milton Pedraza is CEO of the Luxury Institute, a New York-based ratings and research institution that focuses on the top 10% of America's wealthy.